Next cash-worthy clunkers will be appliances

The federal government is expected to finish details in coming weeks of another tax-supported shopping extravaganza, known as Cash for Appliances.

By Peter Whoriskey

Published 5:41 pm, Friday, November 27, 2009

Image 1of/1

Caption

Close

Image 1 of 1

The number of shipments of home appliances in the U.S. is down 12 percent from last year, according to the Association of Home Appliance Manufacturers.

The number of shipments of home appliances in the U.S. is down 12 percent from last year, according to the Association of Home Appliance Manufacturers.

Next cash-worthy clunkers will be appliances

1 / 1

Back to Gallery

WASHINGTON - In U.S. history, there might have been no better time to own a junk car, a rattling old fridge and a leaking dishwasher.

On the heels of its ballyhooed Cash for Clunkers program for cars, the federal government is expected to finish details in coming weeks of another tax-supported shopping extravaganza, known as Cash for Appliances.

Supported by $300 million from the economic stimulus, the program will offer rebates to consumers who buy energy-efficient refrigerators, dishwashers, air conditioners and other appliances to replace their older models.

And like the $3 billion cars program that gave consumers money for swapping their clunkers for more fuel-efficient rides, the appliance initiative seems destined to inspire shoppers, drive up sales for a while and divide economists over how much lasting good this chunk of government spending will do for the economy.

"The premise seems to be that for Americans to be richer, they need to throw out their old appliances faster - I don't see it that way," said James Hamilton, an economics professor at the University of California at San Diego who has blogged about the clunkers rebates. "I don't like the idea of just spending money for its own sake."

Most Popular

While many economists believe that government incentives to lift consumer spending can boost the economy during a recession, they differ over whether the sales spikes that accompany the rebates are meaningful or merely concentrate sales that would have occurred before and after the rebate period anyway.

The Obama administration's Council of Economic Advisers has indicated that Cash for Clunkers provided a worthwhile boost even though many of the 690,000 clunkers sales would have happened anyway. In their baseline assessment, the program increased car sales this year by 330,000.

Clunkers "is one of several stimulus programs whose purpose is to shift expenditures by households, businesses and governments from the future to the present," the council wrote recently. "Such time-shifting is valuable in a recession, when the economy has an abundance of unemployed resources that can be put to work at low net economic cost."

The appliances program might be destined to continue the debate. Because when it comes to stimulus, timing can be critical, and the implementation of the effort has dragged on, possibly diminishing its usefulness.

Although the $787 billion stimulus program was signed by Obama in February, much of the cash-for-appliances money won't hit the streets until February, March or April.

The rebate program is being run by state governments, which must define and enact their rebate plans with federal government funding and approval.